What is a Third Federal HELOC?
Life can throw us some unexpected curves. If this has recently happened to you and you will need a sizeable amount of cash to stay afloat, then a home equity line of credit from Third Federal Savings & Loan may be just what you need. These flexible loans differ from home equity loans in that they allow you to quickly come up with cash to pay for major expenses, expected or unexpected. Read on to find out more about Third Federal’s HELOCs and how one can benefit you.
How Third Federal HELOCs Work
Third Federal’s HELOC product is much the same as most other HELOCs on the market today. Borrowers can apply for HELOCs that are up to 80% of the home’s loan-to-value ratio when combined with the first mortgage. They can access the funds in their HELOCs either via check, debit card or over the phone or in person at a Third Federal branch location.
All HELOCs come with both a draw period, when the borrower can draw on the line of credit, and a repayment period, during which time the borrower must repay all funds that have been withdrawn. Third Federal has draw periods for as long as 10 years and repayment periods for as long as 20 years for a total of 30 years.
Third Federal HELOC holders can also make additional payments on their loan amounts at any time with no penalty. Monthly payments can be amortized for up to 30 years. As with most HELOCs, Third Federal’s HELOCs come with variable interest rates that rise and fall in tandem with the prime rate that is published daily in The Wall Street Journal.
Third Federal only has 39 branches in two states, but it offers home equity lines of credit in CO, CT, DC, GA, IL, IN, KY, MA, MD, MO, NH, NJ, NY, NC, OH, OR, PA, TN, VA, and WA.
Qualification & Requirements for a Third Federal HELOC
Prospective borrowers must go through a similar application process as they would with any other lender in order to get a HELOC. First, they must complete the loan application form, which they can do either online at thirdfederal.com, over the phone or in person at a Third Federal branch location.
If one of the latter two options is used, then a loan officer will guide them through the application in person, while those who apply online will have a loan officer contact them and review the application together. Third Federal will also pull the applicant’s credit report to get their credit score and payment history.
Borrowers will then receive an application kit a few days later. The kit contains all of the necessary paperwork for them to sign as well as the necessary disclosures and a list of all of the documentation that the borrower will need to gather and submit. For home equity lines of credit, this documentation includes the borrower’s two most recent pay stubs and the most recent W2 they received.
Self-employed borrowers must submit the past two years of income tax returns. Other documents, such as K-1 forms for partnership income, Social Security statements or stubs and retirement income statements may also be necessary. A list of the borrower’s current monthly debts and monetary assets are additional items that will be needed.
Once Third Federal has received the application kit documents from the borrower, then it will order an appraisal of the borrower’s home from an appraiser who is familiar with the value of homes in the borrower’s area. In some cases, the appraiser may need to come inside the applicant’s home to determine its true value.
Once Third Federal receives the application and the appraisal, it will make a decision as to whether the borrower qualifies for the HELOC or not. A loan officer will stay in close touch with the applicant during the entire process.
Once the application is approved, Third Federal will complete a title search or exam for the borrower. It will then use the title exam results to verify the legal status of the property and prepare the closing documentation. Then it will contact the borrower to schedule the loan closing date and time.
The closing will happen either at a Third Federal branch location or at a title company selected by Third Federal to act as its agent. (Under certain circumstances, it may be possible for the closing to be done at the borrower’s home.) In any case, a loan officer will contact the borrower a few days before closing to provide a final review of all of the information pertinent to the HELOC.
Borrowers who wish to increase the spending limit on their HELOCs must go through the entire application process again. A new account number will be assigned along with a new book of checks and equity debit card.
Typical Interest Rates
The exact rate of interest that Third Bank will assign to a HELOC will depend upon several factors, including the borrower’s financial stability, the size of the loan and the area in which the borrower lives. But Third Federal is known for having slightly lower rates than the majority of its competition.
Third Federal also offers something called a Rate Relock feature with its Smart Rate adjustable rate mortgages. This unique feature allows borrowers to relock their variable interest rates to Third Federal’s current interest rate for the next three or five years. The cost to exercise this feature is $295.
But borrowers are free to relock their rates as many times as they like, thus eliminating the uncertainty that comes with a variable rate of interest. However, each lock will cost a separate fee. The new interest rate goes into effect in the month following the month of application for the lock.
Pros & Cons
Third Federal only offers HELOC balances up to $150,000, and they don’t offer long-term rate lock options. But their loan rates are generally about 0.5% lower than most of their competition, and they are also willing to work with borrowers with higher debt levels than most other banks or credit unions will consider, as long as the applicant has good credit.
Its customer service has also earned high marks with knowledgeable representatives. There are also no closing costs, prepayment penalties or minimum draw amounts. The annual fee is also waived in the first year of the loan.
The great rates charged by Third Federal are usually much lower than interest charged by credit cards or personal loans. This makes Third Federal HELOCs an ideal vehicle for debt consolidation. It also offer a robust online banking experience, with a HELOC application that is somewhat more complex than many other online HELOC applications, but there is a help button on every screen to answer many of the borrower’s questions.